Shell profits rise but mixed earnings season takes shine off  Big Oil firms

Shell’s adjusted net income from July to September was $6.22bn, an increase of 23% from the prior quarter but down about a third from a year earlier.

Shares in Shell rose as the company accelerated the pace of buybacks following an increase in third-quarter profit due to higher energy prices, strong gas trading, and wider refining margins.

The company’s performance, which matched analyst expectations, caps a mixed earnings season for Big Oil. The US majors fell short of estimates, taking some of the shine off recent takeover deals, while their European peers mostly did better than expected.

“Shell delivered another quarter of strong operational and financial performance,” chief executive Wael Sawan said. Total buybacks of $6.5bn (€6bn) in the second half are “well in excess” of the $5bn pledged in June, he said.

Shell’s adjusted net income from July to September was $6.22bn, an increase of 23% from the prior quarter but down about a third from a year earlier. The London-based oil and gas giant said it would repurchase $3.5bn of shares over the next three months, an increase from $3bn in the prior period.

That stands in contrast to BP, which kept its buyback steady after profit fell short of expectations. JP Morgan Chase downgraded the company after questioning whether it can maintain its pace of repurchases in the fourth quarter.

Shell’s results are good overall, with buybacks that are “slightly above market expectations”, RBC analyst Biraj Borkhataria said. Guidance on liquefied natural gas, or LNG, volumes look “slightly soft in some aspects”, he said.

The company had already highlighted its strong performance in natural gas trading in the third quarter, which offset lower production. Total oil and gas output was down 9% from the preceding three months, reflecting higher levels of planned maintenance at the Prelude LNG facility in Australia and works in Trinidad and Tobago.

Maintenance at Prelude and lower volumes from Egypt will continue to have an impact on LNG output until the end of the year, Shell said.

Shell’s results were also boosted by higher refining margins, with its own global metric almost doubling in the quarter. However, the company said that could change in the final three months of the year. Earlier this week, BP’s interim CEO Murray Auchincloss said refining margins are “challenging” due to an oversupply of diesel and gasoline globally. 

Bloomberg